Terms
What is GDP
Katie sells home grown tomatoes at the local farmers' market
what category does this fit into?
consumption or consumer spending
Net export:
The USA gives away 2.5 billion dollars worth of vehicles to Latin America, but they get 3 billion dollars worth of vehicles from China.
In this situation what is the total net export of the USA?
-500 million dollars
Example that is used to calculate GDP.
Buying goods and services, and more
What is it called when inflation goes down?
Disinflation
represents the difference between a country's total value of exports and imports over a specific period.
what is net exports
The federal government spends 90 million dollars to fix new roads.
what category does this fit into?
GOV Spending
Investment:
Mexico invests $200 million in building infrastructure and $100 million in new equipment. If depreciation costs for old equipment are $50 million, what is the net investment?
250 million dollars
How does government spending impact GDP?
Government spending directly increases GDP.
What does it mean if a country has a high GDP per capita?
It means higher average wealth per person.
country that produces all of its own goods and services and doesn't participate in international trade.
What is closed economy?
Apple spends 2 billion dollars in new facilities all over the world.
what category does this fit into?
investment spending
Government spending:
The government of USA spends $1 trillion on building schools, $2 trillion on defense, and $500 billion on social security benefits. What is the total contribution of government spending to GDP?
3 trillion
(Social Security is not counted as government spending in GDP since they are transfer payments, not direct purchases of goods and services)
What is the difference between real and nominal GDP?
Nominal GDP is the total value of all goods and services produced in a country.
Real GDP is accounts for inflation and reflects the true growth in the value of goods and services.
Are stock investments included in “Investment spending”?
NO
the total money spent on final goods and services by individuals and households for personal use and enjoyment in an economy.
what is consumption or consumer spending
John buys a BMW x5 competition and casually gives Uber rides once in a while. The uber work is not profitable in comparison with the monthly costs of the car.
what category does this fit into?
Consumption or consumer spending
Consumption:
Households in a country spend $1.5 trillion on goods and services, and businesses spend $700 billion on raw materials and machinery. What is the total consumption in the country?
$1.5 trillion
(Only household spending counts as consumption in GDP. Business spending falls under investment.)
Who wins from unexpected inflation?
Borrowers because they repay loans with money that has lower real value than when they initially borrowed it, reducing the burden of debt.
Nominal GDP minus inflation rates EQuals?
GDP
Direct loan from one private individual or entity to another, without an intermediary such as a bank or other institutional lender.
What is private borrowing?
Sebastian Boekdrukker gets a golf scholarship to go to a college in Orlando.
what category does this fit into?
transfer
The USA has a total consumption of $10 trillion, with investments reaching $4 trillion. The government spends $3 trillion on goods and services, while exports contribute $2 trillion and imports total $3 trillion. Additionally, the country provides $1 trillion in foreign aid and receives $500 billion in remittances. Considering these factors, what is the total GDP of the USA?
$16 trillion
(The total GDP is calculated by summing the main components)
How do black market activities and informal economies affect a country's reported GDP?
Black market activities and informal economies are not counted in the official GDP because they are illegal transactions.
What does it mean if the year's GDP is higher than nominal GDP?
Inflation